By continuing to use the site, you agree to the use of cookies. Continue More information

The Conversation - February edition

Feb

Welcome

In December, we outlined the six themes that we think will most affect the communications landscape this year. We’ll be exploring each of these over the coming months, beginning with the theme of transparency.

A shift towards hyper-transparency has been on many stakeholders agenda for some time now – but this year, it will become more firmly established as the norm. Consumers, clients and partners all expect organisations to operate in a transparent way and this involves both 1) proactively sharing information and 2) when asked, being able to provide information in a timely manner. To shift an entire business to this new way of thinking is a huge undertaking, and one that stakeholders appreciate is a challenge. Arguably, the role for communications is to – ultimately – act as the moral compass that pushes the organisation towards the end goal.

Our thanks go to those who have contributed thoughts to this edition. Sandra Macleod, FIPR CCMI, is CEO of Mindful Reputation, and a Director at Reputation Dividend. She looks at ways in which organisations can measure transparency.

In The Forum, risk management and insurance expert Martin Fessey, and freelance writer and a former senior executive who has worked at international companies including Visa, Aon and Agilent Technologies, James Wood, discuss how organisations can manage reputation.

Transparency is an issue that means different things to different people, and provokes fascinating debate. If you’d like to explore this further, do get in touch with us. We love hearing from our readers.

A word from our founder

Openness pays. This is why it is remarkable that, more than ever before, the trust deficit seems to be continuing to grow.

It used to be true that organisations could, by and large, dictate what information they released – and how. Or limit the dissemination of information to carefully selected audiences. This is now, of course, a thing of the distant past.

Stakeholders expect more of organisations and some are finding it increasingly difficult to keep up with these demands. Changing the way that things are done takes time and is usually achieved incrementally. Arguably, it is most challenging when you have established legacy processes that have become deep-rooted within the organisation’s culture – “this is the way we do things here.”

However, the solution is not an impossible one; it doesn’t require tearing all the walls down at once, leaving the organisation vulnerable. Rather, it must demonstrate that it is willing to co-operate, and find the information that the stakeholder is seeking.   Many businesses are already starting to do this. Yet much more is to be done – not least recognising that this doesn’t stop with the answer to a question.  Instead the smart organisation needs to realise that every answer provides an opportunity to shape an engaging narrative that is probably likely to be of interest to multiple stakeholders.

Sermelo news

We are delighted to announce that we are hiring again to expand our talented team. We’re looking for a dynamic, proactive and intellectually curious person, with a strong academic background to join us! You can read more here.

We’re also all thrilled that our very own Tom Clive successfully completed a 10k charity run on Sunday, without injury, and raised a substantial amount for Cancer Research. Well done Tom!

Client news

Eaton

We are pleased to share that we are working on a new series of white papers for Eaton, covering several of its European markets, on the importance of safe evacuation in today’s business world.

Andermatt

At the end of last year, we went to visit the picturesque Swiss alpine village of Andermatt, which is currently part of an ambitious development project. Decorated with snow and Christmas lights, it was great to see how the project is coming along since we saw it last.

Andermatt is unique – not only is it one of the Alps’ most snow sure destinations with great winter skiing and snowboarding – but it also offers a range of summer options, including the chance to play on a brand new championship style 18 hole golf course surrounded by beautiful panoramic mountain views, in addition to mountain biking and water sports.

Developer Samih Sawiris’ visionary project seeks to turn Andermatt into an exclusive, year-round destination – and work is well underway. We looked around several completed apartment blocks and saw that work has begun on a brand new 4* hotel.

Insight

Beyond financials:  As uncertainty begets volatility, broader measures are needed to guide leaders

Evidence is mounting that intangibles such as reputation are fundamental to the financial success of companies.  The chill wind blowing through Davos last week pointed to growing market volatility, uncertainty, income inequality, civic unrest and pressures over climate change.  Companies looking to take employees, consumers, investors, and other stakeholders with them through this choppy journey were advised to consider broader insights and metrics as part of their commitment to transparency and improvement.

Financial information in isolation has been shown to be insufficient to communicate the breadth and complexity of risks, and the location of wider value creation across companies.  Indeed, in a survey by PwC of over 1300 global CEOs, 74% thought that “measuring and reporting non-financial impacts contributes to long-term success.”

Today’s leaders are said to be looking for a more holistic picture of how organisations create value and of the external factors that impact their business model. The bar needs to be raised, encouraging companies to measure, manage and report on wider measures than pure financials, so that boards of directors, investors, and shareholders start asking the right questions with respect to the drivers of behaviour, reputation and trust.

While the language and questions in the Board Room are changing, many of the largest and most sophisticated companies are still unclear about the value of reputation, how to build it and how to make it a sustainable part of the decision making and resourcing.

When considering measuring reputation, it is important to ask “Reputation for what, among whom, and to what purpose?”  Along with perceptions, expectations and drivers of behaviour, these are the things that can and should be measured.  With that key insight, companies can build solidly sustainable relationships based on improved transparency and mutual trust on goals and ambitions.

The latest study from Reputation Dividend showed that corporate reputations contributed a massive £790bn of shareholder value in an otherwise challenging market, representing 36% of market capitalization across the FTSE 350.  The single most valuable component of reputations beyond the the impression of ‘financial soundness’, was the ability to ‘attract, develop and retain talent’ and ‘quality of leadership’.  Interestingly, the economic impact of ‘corporate responsibility’ grew more than for any of the other factors tracked, with positive perceptions now boosting investor confidence worth £53bn of shareholder value.  At a company level, it is possible to determine individual reputation value and drivers, mapped against peers and competitors, to help support improved decision-making.

Looking ahead, with greater uncertainty dominated by the forthcoming EU referendum, the winners over the next twelve months will be those who focus on the operational and messaging priorities based on such data to support continued confidence through turbulent times.

Reputation may be intangible but it has a very tangible value.  It is made up of many component parts and consumed variously by those stakeholders that can make or break companies ahead.  These things can and should be measured, understood, protected in our increasingly complex and changing world.  Beyond financials.  Because it matters.

Sandra Macleod, FIPR CCMI is CEO of Mindful Reputation, and a Director at Reputation Dividend.

The Forum

James Wood, freelance writer and former senior executive

What should organisations do to become more transparent?

The most obvious step any organisation can take towards greater transparency is the publication of data relating to their activities. Various jurisdictions mandate the publication of data by companies at different levels. In Canada and the US, for instance, the age, gender and employment history of a Board is considered materially relevant information – not the case in other markets. As I argue below, governments have in some ways led the field in allowing open access to information. The UK's Freedom of Information Act would be an example of this.

The other essential point, and I believe this should be a mantra for all, is clear, direct and honest communication. That is, speaking plainly and answering questions directly.

Can an organisation regain its reputation once trust is lost through lack of transparency?

It depends. For investors, absolutely yes, because their lens tends to be different from that of the general public. This is particularly true of institutional investors. Governments and the general public are a different matter, however.

Some people still make reference to Exxon's mistakes in the Valdez disaster, whereas BP seems to have recovered relatively quickly from an arguably more egregious set of errors in the Gulf of Mexico. In the latter case, the Board acted quickly to remove, or ask for the resignation of, the CEO – a move that suggests Boards, as well as management, have an important role to play in terms of communication and reputation which goes beyond their traditional governance remit.

Are there any industries you think are ahead of the curve when it comes to being more transparent?

I've mentioned government above and I do believe that initiatives such as the UK's FOI Act and Canada's "Sunshine List", which mandates the publication of salary details for all public employees earning more than CAD$100,000 on a searchable database, are positive steps.

The other side of this argument is the delicate issue of privacy in the internet age: is it right that people's salary details should be readily available on the internet? Furthermore, I believe that currently both governments and businesses have too many easy paths to avoid publishing relevant information, citing national security, commercial confidentiality and the like. Looking at the food industry, we can see how public concerns over sustainability and animal welfare have gone a long way to encouraging the publication of more information about sourcing, etc.

Finally, it is still all too easy to point the finger at sectors where transparency needs to improve: banking, insurance, pharmaceuticals – especially clinical trial data, in the latter case. That the list of those requiring improvement is longer than the list of those who are performing well suggests that, as a society, we still have a long way to go before we can claim to have fully transparent, clear and honest dialogue.

Martin Fessey, risk management and insurance expert

What should organisations do to become more transparent?

I might look at this from the opposite direction – what activities of an organisation should remain opaque?

Of course, there are core strategic, competitive or legal/regulatory restricted activities that must remain controlled, and the “need to know” principle may apply at times. However, I posit that for most organisations, these are relatively few and identifiable.

An open door policy with stakeholders, accompanied by an understanding of what must remain private, why and for how long engenders a spirit of partnership and mutual purpose.

The potential alternative is confabulated messages, and a reputation built on half-truths and assumptions rarely is to the organisation’s long-term benefit.

Can an organisation regain its reputation once trust is lost through lack of transparency?

It depends on how that reputation has been built and with whom. If it is based upon quality, reliability or price, just continuing to deliver on that promise may repair the damage very quickly. Volkswagen and Tesco are two prime examples, and in the case of the former, it can be argued that its reputation for “innovative German engineering” may even be enhanced!

Of course, shareholders of both organisations may think differently – and act accordingly.

Where transparency is a proxy for trust in the eye of key stakeholders – particularly if that trusted relationship is in any way personal – past reputation means for little once lost. The banking industry comes to mind here – it was historically one of the most trusted and transparent business models that people thought they understood…

Recovery not only depends on culling those with responsibility, but changing the whole culture and even the purpose of the “new” organisation.  That can take years, decades or even perpetuity to achieve – and many won’t make it.

Are there any industries you think are ahead of the curve when it comes to being more transparent?

I am not sure that this is an industry-specific issue.  It might be natural to consider how organisations at “ethical extremes” demonstrate transparency. However I am not sure this stands up to scrutiny. The recent troubles at the top of “The Ethical Bank” (Co-Op) are well documented, whereas defence companies, as suppliers to democratic governments, around the world must be increasingly transparent.

A better measure might be ownership and governance structure. Organisations that have a close or even symbiotic relationship with their owners tend to be transparent by nature. Employee-owned John Lewis comes immediately to mind – where every element of the business is under close scrutiny by its partners.  Another example would be mutual insurance companies that, being owned by their customers (policy-holders), have governance structures that demand complete transparency and trust.

By contrast, many privately-owned companies – with few stakeholders to respond to – are secretive by nature, but consider their reputation to be sacrosanct. They may argue that lack of transparency is the key to protecting that reputation, but, of course, others might disagree.

Out and about

Tech in 2016

The Institute of Directors’ Deputy Head of Policy – Jimmy McLoughlin – provided a useful overview of trends in technology, and how he believes they will affect businesses and the way we live this year.

What was particularly interesting to learn is that the UK’s internet economy is one of the fastest growing in the world and – as illustrated by contactless payments – is one of the quickest adopters of new technologies.

A few resources that were flagged are worth a mention, particularly BCG’s report on The Internet Economy in the G-20 and the Gartner Hype Cycle, which tracks the technological innovations that businesses should be keeping an eye on.

Distributing and competing in online markets

Last week, we attended a seminar run by Addleshaw Goddard, which looked at online markets – and what this means for the way that retailers operate. Andy Giles from the Said Business School looked at the shape of the retail landscape and outlined the effects upon retailers and regulators alike.

The retail sector is rapidly changing and the new ‘norms’ are still being established as retailers strive to find the optimal organisational structure that will enable them to remain competitive, both in the short- and long-term.

From a regulatory perspective, the law remains the same – but it must be applied to new facts. This is particularly interesting and complex around new types of businesses, such as resellers and comparison websites, where there are ambiguities around the nature of their roles.

While there are opportunities aplenty, operators of these new business models must consider how they can legitimately operate in a marketplace that is slowly becoming less grey.

Category

Sermelo News

Share

  • Facebook
  • LinkedIn
  • Twitter
  • Google+

Comments

No comments have been made yet

Add new comment

(comments will be moderated before being published)

*Required fields

Latest Tweets

  1. New research shows the best way to keep our mental abilities in older age is to do 'intellectual activity' through… t.co/FKP6BIwFBx11 Dec
  2. @PhoenixCronin Hi Phoenix, we have a spokesperson who could potentially be interested in speaking to you about this… t.co/JPy3xQ88Ay04 Dec
  3. 7% fall in share price to Marriott International shows the damage of #cyber #attack and the importance of #customer… t.co/bsx5FCX45G30 Nov
Sign up for The Conversation: